Political Preferences and Public Sector Outsourcing

24 Pages Posted: 4 Jul 2011 Last revised: 2 Feb 2017

See all articles by Mikael Elinder

Mikael Elinder

Uppsala University - Department of Economics; Research Institute of Industrial Economics (IFN)

Henrik Jordahl

Örebro University - School of Business; Research Institute of Industrial Economics (IFN); CESifo; IZA

Multiple version iconThere are 2 versions of this paper

Date Written: July 4, 2011

Abstract

There are several theoretical accounts of public sector outsourcing. We note that leading theories give different predictions of the influence of political variables and test the predictions on a Swedish data set in which outsourcing varies between municipalities and over time as well as between services. Our identification strategy focuses on two services with similar contracting problems and local market conditions: preschools and primary schools. We study a period in which Swedish municipalities had full discretion in the provision of preschools, while their influence on the provision of primary education was limited by a national voucher system. The comparison of preschools and primary schools in a difference-in-differences model suggests that the political color of the ruling majority matters for outsourcing, which is consistent with the citizen candidate model of representative democracy.

Keywords: outsourcing, ideology, public provision, contracting out

JEL Classification: D23, H11, H40, L33

Suggested Citation

Elinder, Mikael and Jordahl, Henrik, Political Preferences and Public Sector Outsourcing (July 4, 2011). IFN Working Paper No. 877, European Journal of Political Economy, 30 (June), 43-57, 2013, Available at SSRN: https://ssrn.com/abstract=1878493 or http://dx.doi.org/10.2139/ssrn.1878493

Mikael Elinder

Uppsala University - Department of Economics ( email )

Box 513
Uppsala, 751 20
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Henrik Jordahl (Contact Author)

Örebro University - School of Business ( email )

SE-70182 Orebro, Örebro SE-701 82
Sweden

HOME PAGE: http://https://www.oru.se/personal/henrik_jordahl

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/hj

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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